Senior Tories, as well as Labour, Liberal Democrats and the anti-nuclear Scottish National Party, say the merger proposals are another example of Westminster's "insensitivity" towards Scotland. Although Ian Lang, the Secretary of State for Scotland, has pledged that Scottish Nuclear will remain "a separate entity" after the sell-off, management and unions fear that up to 400 jobs at East Kilbride could be lost.
Scottish Nuclear is one of the few large companies that has its headquarters in Scotland, and the Government's merger plans have revived bitter memories of the closure of the headquarters of Britoil in Glasgow; the scrapping of the Ravenscraig steelworks; and the decision last year to downgrade the Rosyth naval base.
Unions and management argue that once Scottish Nuclear is "lumped in together" with Nuclear Electric, executives will be tempted to withdraw managerial and support staff from Scotland and centralise operations in England.
Critics point to the recent decision by British Gas to close its Scottish Gas headquarters, and the move by Rolls-Royce to transfer hundreds of jobs from the company's aero-engine plant in East Kilbride to its Derby base. They say the reduction in the number of large firms with headquarters in Scotland threatens the legal and accountancy professions north of the border, and discourages entrepreneurs.
John Moreland, a non-executive director of Scottish Nuclear, said: "We've seen it happen time and time again. When a company ceases to be Scottish and becomes a UK firm, it chooses the lowest cost centre for its headquarters, which is usually somewhere in central England.
"It's a kick in the teeth for the company and for Scotland," he said.
A final decision on the sell-off is due later this month. Ministers are expected to announce that the five advanced gas-cooled and pressurised water reactor plants controlled by Nuclear Electric will be merged with Scottish Nuclear's two advanced gas-cooled plants. The new company is due to be floated next year.